Peabody Energy notes gain; Macau gaming names rebound; China Evergrande paper drops

By Abigail W. Adams

Portland, Me., Sept. 17 – Activity in distressed debt names remained muted on Friday with emerging market distressed debt remaining in focus.

After a two-day slide, Macau-based gaming companies pared their losses on Friday.

Wynn Macau Ltd.’s and Macau-based Studio City International Holdings Ltd.’s junk bonds regained 1 to 2 points after losing 4 to 8 points over the past two sessions.

China Evergrande Group’s dollar-denominated junk bonds were once again active and sinking further as the market braces for the company to default.

In the domestic energy space, Peabody Energy Corp.’s 6 5/8% senior notes due 2025 were on the rise.

The rebound

After a two-day slide prompted by increased government scrutiny, Macau-based gaming companies pared their losses on Friday.

Wynn Macau’s 5½% senior notes due January 2026 rose 1 5/8 points to close the day at 96 7/8, according to a market source.

There was about $7 million in reported volume.

The notes were above par at the start of the week.

Studio City’s 5% senior notes due 2029 regained 2 points to close Friday at 92.

The notes fell almost 8 points on the week.

The companies have been under pressure since Macau announced its intention to increase supervision of its gaming operators on Tuesday.

China Evergrande drops

China Evergrande’s dollar-denominated junk bonds continued their downward spiral on Friday as the market braces for an imminent default on the company’s debt.

China Evergrande’s 12% senior notes due 2024 (C/CCC-/CCC) fell 2½ points to close the day at 26¾.

The 9½% senior notes due 2024 fell 2½ points to 27.

The 8¾% senior notes due 2025 fell 2 points to 26¾.

The market has long anticipated the China-based real estate developer would default on its debt with the company’s dollar-denominated notes dropping 70 points since May.

Chinese authorities announced on Wednesday that the company would be unable to make the interest payments on its bank loans that comes due next week.

The company has about $88 billion in debt with 42% maturing in a year, The Wall Street Journal reported.

Peabody gains

Coal miner Peabody Energy’s 6 5/8% senior notes due 2025 were on the rise in decent volume on Friday.

The 6 5/8% senior notes gained 1¼ points to close the day at 84¾, according to a market source.

There was about $5 million in reported volume.

While the notes were retracing their losses from earlier in the week when they traded as high as 85½, the notes have been on an upward trend since early September.

The company announced in early September that it had reached an agreement with the United Mine Workers of America that could result in the reopening of its Shoal Creek Mine in Alabama.

The mine has been closed since October 2020.

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